Justin Sun, the influential yet controversial founder of Tron, is mainly known for self-promotion and marketing stunts. A few years ago he tweeted seemingly non-stop about paying $4.6 million to have lunch with Warren Buffett. He plastered his face on the elevators, walls and windows at the New York Midtown Hilton during Consensus 2019. And on Thursday, he offered to buy all the bitcoin Elon Musk sells. Most recently, he said he would build the first crypto organization in El Salvador, whose president declared he wants to make bitcoin the country's legal tender.
So it was somewhat startling when, during a recent Chinese podcast interview with CoinDesk, Sun spoke candidly about his failures. Speaking in Mandarin, he also touched on physics and philosophy, cultural differences between the U.S. and China, and a wild trade that may still keep him up at night.
“I personally think we are not successful, there is a lot we can improve,” Sun said when asked if Tron is doing a good job in going global. “I can talk about a few pits we fell in.”
East meets west
Sun became famous in China for Peiwo, a social media app, and the acquisition of a popular file-sharing protocol BitTorrent. He founded the Tron Foundation in 2017 and raised $70 million through an initial coin offering (ICO) before China deemed such fundraising processes illegal later that year. He built a large presence on Twitter and made his crypto project known among Western crypto communities. But the path wasn’t always smooth.
“In the earliest times, we had some conflicts with Western communities when communicating with them due to negligence,” Sun said. “The core issue is that Western communities take everything too seriously. If you say something, they must see the results and real delivery. They do not care about price as much as the Chinese communities though.”
Western communities can accept a drop in token price, Sun said, but they want projects to deliver on their promises and implement their ideas.
“Chinese communities don’t care about those as much, everything is good as long as the price is going up.”
Sun also noted that if Chinese projects want to attract western communities, being able to speak English is not enough. “We need to learn their culture,” he said. “You need to learn how to use Twitter, Instagram, Reddit and other popular western social media.”
Western developers value open-source projects but that would not necessarily draw Chinese developers to contribute; they need to be paid, Sun said. That is why western projects tend to be more decentralized than some Chinese projects such as Tron and Binance Smart Chain, which are led mostly by just a few developers, he said.
While Sun did not specify what particular event prompted this realization, the profoundly different approaches to governing a blockchain project between Chinese and western teams have sparked one of the most controversial conflicts in crypto history.
The drama was between Tron and a blockchain-based social media platform Steem that rewards its users with cryptocurrency. In late 2019, Sun bought 30% of STEEM token supply from the network’s co-founder Ned Scott. What he apparently considered to be a venture capital investment to acquire the project became an unannounced hostile takeover in the eyes of Steem’s community members. Some of the large STEEM holders were so angry that they slapped TRON with a lawsuit and hard-forked the network into a separate chain called Hive.
Sun said there have also been many communication issues when it comes to interacting with western developers and crypto communities.
“In the early days, some of Tron’s posters and updates were published without me checking; many of them are inconsistent because there are many departments and the company is too big, and people would complain about inconsistency,” Sun said. “We have been trying to improve internally and be more transparent and in sync across different departments to fit into western communities’ culture.”
Another big difference is that western developers have a culture that encourages open-source projects. On the contrary, most people in China work for money, the open-source spirit is not enough, and few people would be willing to contribute to a project without being paid, Sun said.
“Cryptocurrency was born from the same open-source culture,” Sun said. “When we promote projects to western communities, we should put an emphasis on open-source.”
Buffett vs. Musk
While Sun was a recognizable name in crypto circles, he became known to the general public when he won a $4.6 million bid in a charity auction to have dinner with Warren Buffett in 2019. But as much as Sun respects Buffett’s investment approach, he said he thought the Oracle of Omaha might have failed to appreciate the value of crypto.
Buffett referred to bitcoin as “probably rat poison squared” and as a gambling instrument. Charley Munger, vice chairman of Buffett's investment firm Berkshire Hathaway, said bitcoin’s success is “disgusting.” One of the few times Buffett touched bitcoin was when he gave one bitcoin to charity shortly after he received it from Sun.
“For Buffett’s generation, they value companies based on things like P/E ratio and cash flow,” Sun said. But ideas and concepts continue to evolve, he said.
In the Chinese podcast, Sun drew an unusual analogy between crypto’s development in the financial industry and the evolution of classical physics theories.
“In the 19th century, we had [Sir Isaac] Newton's classical mechanics, then we had quantum mechanics in the 20th century,” Sun said. “The biggest difference between these two theories is that, unlike classical mechanics, not everything can be precisely measured in quantum mechanics.”
Sun also spoke at length about Elon Musk, the Tesla CEO who consistently makes waves in the crypto world with his bitcoin and dogecoin-themed tweets.
“Personally, I really admire Elon Musk,” Sun said. “Before I got into crypto, I bought lots of shares of Tesla in 2012. Tesla is also my ‘first pot of gold.’”
Sun said even in 2012 he firmly believed that Elon Musk would be the one that would surpass Apple co-founder Steve Jobs and become “the new god of the scientific world.”
While some investors and financial regulators have accused Musk of using his social media influence to manipulate the stock market, Sun praised Musk for taking advantage of his social media clout to boost his and his companies’ popularity.
“Many people look down on Elon Musk, I think it maybe because people have a stereotype for the richest man or the new gods of technology,” Sun said. “People think they should be like [Microsoft's] Bill Gates or Buffett, who tend to be mellow and quiet, but Elon Musk is too spontaneous and emotionally unstable. But there are no rules that say the richest man has to be quiet, mellow and inactive on social media.”
Sun said he thinks Musk represents a new generation of successful entrepreneurs who are engaging and interact with their fans all the time.
“I indeed did a little research on Gates and Jeff Bezos’ [of Google] social media, they are not active and do not speak in public very often,” Sun said. "The last times their posts went viral and had more than 10,000 reposts were when they were getting divorced."
“Musk’s challenge to the traditional image of the world’s richest man is no less than Donald Trump’s challenge to the traditional image of a U.S. president,” Sun said. “You can use Trump to explain Musk. They have similar personalities.”
A wild trade
Sun is heavily invested in the digital asset market, even outside his own company.
During the market crash on May 19, Sun’s $1 billion position was almost liquidated on the Ethereum-based lending protocol Liquidity.
The protocol went into a two-minute recovery mode before it had the chance to liquidate Sun’s position. He paid back the debt shortly after and avoided the liquidation.
If Sun hadn't been able to pay off the debt he owed within two minutes, he expects his entire position would have been liquidated.
“We were in line to be liquidated but fortunately we were at the end of the line,” Sun said. “There had been more than 30,000 [ether] that got liquidated, it would be really dangerous if that happened when we were asleep.”
If Sun’s massive position had been liquidated, ether might have dropped below $1,000 and triggered a bigger slump.
According to on-chain data, Sun rebalanced his trove shortly after the price touched $1,500 by paying $300 million back. Sun said he had 50% leverage at the time but has decreased his leverage since then.
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